The marketing mix - price

where the firm sets it's prices slightly lower or at the same level as their rivals.

Cost - based pricing

total costs/total sales + profit (sum).

Skimming

(usually used for a new product), where the price of the product is set high initially then the price would drop as it becomes settled on the market.

Penetration pricing

low price is set at the beginning, to gain entry to market. Then it is raised as it become settled.

Destruction pricing (to drive competitors out)

price set is lower than rivals. Even though a loss may be made they keep this low price until rivals are out of business then raise them again.

Price wars

prices of goods are set low to attract consumers. They may buy other products while they are there.

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Factors affecting price

need for profit

price of production

competition in the market

price market could bare

season of the year

quality of stock in hand

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Demand

Demand is the quantity of goods which can be bought at a given price.

Factors causing change in demand for particular goods:

price of goods

customers tastes

level of income

price of the goods

advertising

credit rates

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The marketing mix - promotion

Advertising. Is done to:

introduce a new product to the public

remind public of existing products to boost their sales

highlight information about products or events

Types of advertising:

target- truthful

persuasive- persuades public to buy their goods

generic- general, not specific. Targets large groups

Methods of advertising:

TV

radio

cinema

vehicles

hoardings and posters

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Sales promotion

Sales promotion methods:

special offers

discounts

price reductions

free samples

customer loyalty cards

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Sponsorship

Sponsorship (events)

company donates money to run events for a certain charity etc...

in return the team kits will display the company's logo.

Public relations

public's awareness of the business will be increased

creates a loyalty with members of the public who will buy from the firm

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Legal comtraints on promotion

to protect consumers from false advertising

Legal constraints on promotion states that:

goods must be accurately described

Prices charged must be genuine

all prices must include VAT

country of origin must be visible on packaging

Trade descriptions acts, 1968 and 1972

This covers all information about:

quantity and size

method of manufacturing and testing

place and date of manufacturing

people who manufactured the product

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Advertising standards authority

The ASA was set up to monitor all advertising campaigns which are not broadcasted.

It's principles are, advertising must be:

legal, decent, honest and truthful

prepared with a sense of responsibility

in line with principals of fair competition

ensure public is not misled or offended by advertisements

The ASA regulates:

press advertisements

cinema commercials

direct marketing

sales promotion

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Ofcom ( office of communication)

Regulates communication industries in the UK

Protects against harmful offensive material

Ofcom's principals are to make sure that communication:

adheres to rules on trust and decency

is impartial

does not give offense or cause harm

sets high technical standards

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OFT (office of fair trading)

Promotes and protects interest of consumers

Ensure businesses act fairly toward consumers

The office of fair trading has two main aims:

1. To protect consumers and explain their rights

2. Ensure that businesses compete open and fairly

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The marketing mix - place

This is important for producers to find out where the best place to sell their product will be. To do this they must consider:

most appropriate sales outlet for that product

most appropriate channel of distribution

most appropriate method of transport

Parties involved in distribution

manufacturer- produces goods that will end up with consumer. Eg, farmer, factory

wholesaler - link between manufacturer and retailer. Purchases goods in bulk, then stores them for the retailer to buy in small quantities. Offers deliver services. They also save producers numerous transactions.

Retailer - final seller of the goods to the consumer. Eg, shops, supermarkets. They break the bulk so consumers can buy in small amounts.

consumer- final user of the product

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Channels of distribution of goods and of services

The way in which products are passed from producer to consumer depends on:

cost of product

type of product

life span of product

competition

demand for product

There are 3 main channels in common use:

1. Manufacturer to consumer via wholesaler and retailer

2. Manufacturer to consumer via retailer

3. Manufacturer to consumer directly

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Implications of Internet distribution

There are 544 million people using the Internet, this is a huge opportunity for businesses to expand their market to different counties and will obviously attract new consumers if they are smart abbot it.

Implications for distributing via the Internet are:

products must be delivered in good condition, cheaply and on time.

import and export regulations and shipping laws must be observed

fleet of delivery vehicles

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Methods of transport to distribute goods

Depends on:

is the product valuable

is the product breakable

how quickly is the product required

how much will it cost for transport

how far does the product need to be transported

The methods of transport are:

Air - fast, secure, only takes small loads, expensive

Sea - slow, secure, takes heavy loads, cheaper than air

Road - slow for large distances, can be used at any time

Rail - fast, small loads, cheaper than road

Pipeline

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The marketing mix - product

Product life cycle stages:
1. Research and development - before the product is place on the market. Market research takes place here. This stage can be lengthly for expensive products, but short for fashion items. It is expensive so the product is in a loss-making position.
2. Introduction - product is placed on the market. Sales increase but still not making any profit. Advertising campaigns get the public aware of the product.
3. Growth - sales increase rapidly. Prices can be dropped as it is settled and competitors will start to arise. Product is now in a profit making position.
4. Maturity - sales levels are maintained as it is established on the market. Competition is intense so advertising is relaunched in order to boost sales. It is it's highest profit making stage as it is now stablished.
5. Saturation - highest point of life. sales are no longer increasing as no new customers can be found. Competition in intense but no new competitors will arise. Profits are still being made.
6. Decline - sales have fallen so much that income cannot cover cost of production. If the business has planned for this stage then they will have a second product ready.

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Legal constraints on product

Legal constraints state that:

goods must be of satisfactory quality

goods must be fit for the purpose they were designed

goods must not be under weight

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Consumer protection act, 1987

Protects consumers from products that do not reach a responsible level of safety.